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DEMOCRACY AND DE FACTO EXCHANGE RATE REGIMES
Author(s) -
BEARCE DAVID H.,
HALLERBERG MARK
Publication year - 2011
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.2011.00381.x
Subject(s) - de facto , democracy , autonomy , economics , exchange rate , exchange rate regime , politics , capital (architecture) , preference , monetary economics , international economics , political economy , political science , geography , microeconomics , law , archaeology
This paper explores the relationship between a country's political regime type and its de facto exchange rate fixity. It argues that more democratic regimes should be associated with less de facto fixity because the median voter is likely to be a domestically oriented producer with a monetary preference for domestic policy autonomy, requiring more a more flexible exchange rate regime. Focusing on a broad sample of country–years in the post‐Bretton Woods era defined by international capital mobility, the statistical results show that not only are more democratic regimes negatively associated with de facto fixity using three different operational measures for this dependent variable, but that this negative relationship gets stronger as the median voter is more likely to be a domestically oriented producer and as societal groups are more able to influence public policy.